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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 8
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SIGNATURE NATHAN A. CHAPMAN, JR.
TITLE PRESIDENT
Ernst & Young LLP
One North Charles
Baltimore, Maryland 21201
(410) 539-7940
Board of Directors
The Chapman Funds, Inc.
Baltimore, Maryland
In planning and performing our audit of the financial
statements of The Chapman Funds, Inc. (the "Fund"),
comprised of the U.S. Treasury Fund and Cash Management
Fund, for the year ended October 31, 1995, we considered its
internal control structure, including procedures for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of
Form N-SAR, not to provide assurance on the internal control
structure.
The management of the Fund is responsible for establishing
and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and
related costs of internal control structure policies and
procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions
are executed in accordance with management's authorization
and recorded properly to permit preparation of financial
statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be
detected. Also, projection of any evaluation of the
structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or
that the effectiveness of the design and operation may
deteriorate.
Our consideration of the internal control structure would
not necessarily disclose all matters in the internal control
structure that might be material weaknesses under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which
the design or operation of the specific internal control
structure elements does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would
be material in relation to the financial statements being
audited may occur and not be detected within a timely period
by employees in the normal course of performing their
assigned functions. However, we noted no matters involving
the internal control structure, including procedures for
safeguarding securities, that we consider to be material
weaknesses as defined above at October 31, 1995.
<PAGE>
This report is intended solely for the information and use
of management and the Securities and Exchange Commission.
/s/ Ernst & Young LLP
November 10, 1995
2
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the
Registrant's Audited Financial Statements dated October 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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</TABLE>
